Researchers have confirmed that
life expectancy at older ages has been rising fastest for the highest
socioeconomic groups, according to a paper published by the National
Bureau of Economic Research.

For those born in 1930, the gap in
life expectancy at age 50 between males in the bottom 20% and top 20% of
lifetime income is five years, the researchers’ estimates show. For
males born in 1960, the projected gap at age 50 between the highest and
lowest quintiles widens to almost 13 years, an increase of nearly eight
years.

The researchers also find there is a growing gap by
lifetime income in projected lifetime benefits from programs such as
Social Security and Medicare. For the 1930 cohort, the present value of
lifetime benefits at age 50 is roughly equal for those in the highest
and lowest quintile of lifetime income, as those at the top receive more
from Social Security while those at the bottom receive more from
Disability Insurance, Supplemental Security Income, and Medicaid. For
the 1960 cohort, by contrast, there is a $130,000 gap in benefits
between the highest and lowest quintiles, as those in the top quintile
are increasingly likely to receive benefits over longer periods of time,
relative to those at the bottom.

Simulations of proposed policy
reforms for Social Security show that some reforms would increase this
gap in lifetime income benefits.

For example, raising the Social
Security early eligibility age by two years (to age 64) raises net
benefits as a share of wealth by 0.1% for males in the lowest quintile
under the 1960 mortality regime and by 0.4% for males in the highest
quintile. In addition, raising the normal retirement age reduces
lifetime Social Security benefits by $30,000 (or 25% of the pre-reform
value) for the lowest quintile of males in the 1960 mortality regime and
by $59,000 (20%) for the highest quintile, the researchers estimate.

“As
policy makers continue to debate the future of social programs in the
United States, they would do well to consider the welfare implications
not only of improved longevity, but also the increasing gap in life
expectancy by socioeconomic status,” the researchers conclude.

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